The U.S. Small Business Administration has released a single-page form designed to make it easier for applicants to complete the application process to forgive Paycheck Protection Program loans, as well as newly revised and updated forms to comply with the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses in need of loans. The money was intended to mitigate the economic effects of the coronavirus epidemic. The legislation required that the SBA issue simplified forms within the first 24 hours of the signing into law. This was to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to lend more particularly to minority-owned businesses that had difficulty getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for PPP loan forgiveness within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published updated forms.”
Forgiveness terms in the first draw of PPP loans
Public Service Loan Forgiveness News – For eligible borrowers First Draw PPP loans are qualified for loan forgiveness. This applies when the loan payment is made within an 8– to 24-week timeframe.
- This is also true for employee compensation and the.
- The loan funds are used on payroll and other expenses that are eligible and
- A minimum of 60% of proceeds are used to pay for payroll expenses
Second Draw PPP Loan Forgiveness Conditions
Second Draw PPP loans to qualified borrowers can be eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan proceeds are used on payroll costs and other expenses that are eligible and
- At least 60% of the proceeds are spent on payroll costs
- How to request loan forgiveness and when
A borrower can apply for forgiveness once all loan proceeds to which the borrower has applied for forgiveness have been utilized. The borrower can request forgiveness at any time prior to the maturity date of the loan. Borrowers who do not request forgiveness within 10 months after the date they will be able to repay the loan are eligible to receive loan payments from their PPP lender.